Ben Strack

The upcoming bitcoin halving could be a boon for the share price of payment company Block, as Berenberg Capital Markets analysts argued bitcoin’s impact on the stock is more than it should be.&nbsp;&nbsp;&nbsp;&nbsp;



The correlation between Block shares and the price of bitcoin — standing at 0.61 — “appears to be a case in which investors’ perception of the impact of bitcoin on the company’s prospects matters more than the reality,” the analysts said in a Wednesday research note.



A potential price boost to <a href="https://blockworks.co/price/btc">bitcoin</a> with the <a href="https://blockworks.co/news/bitcoin-halving-a-year-out">upcoming halving set for April 2024</a> — an event when rewards offered to bitcoin miners are cut in half — could support Block’s stock price, the note adds.



History would suggest bitcoin’s price could spike in the upcoming halving’s aftermath, <a href="https://blockworks.co/news/anniversary-of-2016-btc-halving">industry watchers have said</a>. Matt Lason, chief investment officer at crypto hedge fund Globe 3 Capital, told Blockworks in July that such events “serve as a great reminder for everyone of the power of bitcoin’s monetary policy and the true value of scarcity in an inflationary world.”



<a href="https://blockworks.co/tag/block">Block</a> — formerly known as Square — was founded by <a href="https://blockworks.co/tag/jack-dorsey">Jack Dorsey</a> and Jim McKelvey in 2009. Square remains the name of its payments platform for businesses, while mobile payment service Cash App is another one of its main offerings.&nbsp;



The company’s stock price was $45.39 at 1 pm ET Thursday — down about 30% year to date. Berenberg’s price target for Block shares is $75.&nbsp;



<h2 class="wp-block-heading">A questionable correlation?</h2>



Investors have used stock in Block as a means of gaining bitcoin exposure since the company announced in November 2017 that it would facilitate BTC trading for customers, according to Berenberg analyst Mark Palmer.



“There are more equities that provide that kind of exposure now, but Block stands out because of its high profile and large market capitalization,” Palmer told Blockworks.



Stock prices with a correlation to bitcoin higher than Block’s 0.61 correlation include Coinbase and MicroStrategy — at 0.93 and 0.90, respectively, he added.&nbsp;



Read more: <a href="https://blockworks.co/news/microstrategy-bitcoin-buying?utm_source=CryptoNews&amp;utm_medium=app">Will MicroStrategy ever stop buying bitcoin?</a>



Block officially launched bitcoin trading on Cash App in 2018. The total sale amount of bitcoin sold to customers of the mobile payment service during this year’s second quarter <a href="https://blockworks.co/news/block-earnings-cash-app-bitcoin">jumped 34% year over year to $2.39 billion</a>.



The company invested $50 million in <a href="https://blockworks.co/tag/bitcoin">bitcoin</a> during the final quarter of 2020 and an additional $170 million in the crypto asset during the first three months of 2021. The fair value of the company’s bitcoin investment was $245 million, as of June 30.&nbsp;



Block’s affiliates include Spiral, an independent team focused on open-source work around the Bitcoin blockchain and TBD, a builder of decentralized platforms, protocols and tools.&nbsp;&nbsp;



Still, <a href="https://blockworks.co/tag/cash-app">Cash App</a> reported just $44 million in gross profit from bitcoin transactions in the second quarter — a fraction of its total gross profit was $968 million in the three-month span.&nbsp;



The bitcoin that Block held on its balance sheet at the mid-year point — when adjusted for fair market value — represented 0.79% of its total assets, Berenberg analysts said.



“The impact of bitcoin on Block’s operating performance is not all that significant at this point,” the Wednesday Berenberg note states.



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Bitcoin, Block shares more correlated than they should be: Berenberg

Darren Kleine

The Bitcoin tidal wave is coming, Mark Yusko says.



The Morgan Creek Capital founder claims the combination of Bitcoin network’s upcoming halving event and the potential approval of BlackRock’s spot bitcoin ETF will bring “tens of billions, if not hundreds of billions of dollars of demand into the physical spot market.”



On the Forward Guidance podcast (<a href="https://open.spotify.com/episode/2cTPX4iQBMWcvZMDv1tAwv?si=kGAU2lCGRsCS4_LaRwNadQ">Spotify</a>/<a href="https://podcasts.apple.com/ca/podcast/mark-yusko-macro-doesnt-matter-for-crypto-permissionless/id1592743188?i=1000628169601">Apple</a>), Yusko claims the current bias against the crypto industry that is prevalent among traditional investment entities is “all going to go away” following an ETF approval.&nbsp;



Many barriers are currently in place to keep institutional investor hands off crypto, but that will change, says Yusko. “No one’s going to be able to say no,” he says, “not UBS, not Merrill Lynch, no one.”



Read more: <a href="https://blockworks.co/news/sec-delay-decision-bitcoin-etf-blackrock">Delays mount: SEC defers ruling on BlackRock, Fidelity bitcoin ETFs</a>



But sentiment has faltered considerably since the last crypto bull run, when many more institutional clients were clamoring for access, Yusko says. “They&#8217;re saying it less now than they did two years ago because people buy what they wish they would have bought.”



“Now that it’s <a href="https://blockworks.co/news/bitcoin-daily-death-cross-bearish-market-conditions">on sale</a>,” he says, “they run out of the store.”



In every “other business in the world” outside of stocks and crypto, people will “knock each other over” to snag a good deal, but investing exhibits the opposite behavior, Yusko says.



Podcast host Jack Farley observes, “demand for something is always highest at the top and lowest at the bottom.”



“Humans are really simplistic animals,” Yusko replies. “They buy what they wish they would have bought and they sell what they’re about to need.”



<h2 class="wp-block-heading">Volatility is your friend</h2>



Shifting the conversation to focus on stocks and bonds, Yusko claims the irrational behavior pattern is objectively observable over the long term. “Here’s the proof,” he says, citing JPMorgan twenty-year data that shows “stocks made eight and a half percent over that period compounded. Bonds made five and a half.”



“All you had to do,” Yusko says, was simply “pick one.” But over the same timespan, the average investor only made 2.9% gains, he says.



“How’s that possible?” he asks. “All you had to do is pick one, or a little of each.”&nbsp;



“No. They bought stocks when they were hot and sold them when they were not.”



Yusko argues that young investors should “<a href="https://blockworks.co/news/bitcoin-hodlers-market-volatility">embrace volatility</a>” rather than playing it safe with “risk-free investments” like bonds. 



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG5427708500" width="100%"></iframe>







“Literally, it should be against the law for people from 20 to 65 to own bonds,” he says. “If you’re 20 years old and you can’t touch the money for 50 years…you should be in the highest volatility asset.”



So-called “risk-free” investments still end up netting the cautious investor near-zero profits because “<a href="https://blockworks.co/news/central-bank-heads-talk-inflation">inflation chews up what you make</a>,” Yusko says.



“Volatility is your friend.”



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Bitcoin is ‘on sale,’ Yusko says, but customers are running out of the store

James Cirrone

Argo Blockchain released its second quarter earnings numbers Tuesday. These show depressed revenues and a very slight increase in bitcoin mined in the first six months of the year, ending on June 30.



However, the mining company has two other things under consideration beyond its 31% decrease in revenue during the first half of 2023, compared with the same period last year.&nbsp;



Those are: the need to de-leverage from its debt — worth $72 million as of July — and the weeks-long Texas heatwave that has kept power prices high, according to Argo CEO Seif El-Bakly.



When it comes to the company’s debt, things have certainly improved. As of June 30, 2022, Argo was $143 million in the hole. Furthermore, in this quarter, it has paid down roughly $4 million in pre-existing financial obligations.&nbsp;



A significant portion of Argo’s debt is tied up with Galaxy Digital through a $35 million asset-backed loan secured by the some 23,619 Bitmain S19J rigs located at its Helios site. <a href="https://blockworks.co/news/bitcoin-miner-argo-to-sell-largest-facility-to-stay-afloat-stock-doubles">Galaxy purchased the Texas site for $65 million</a> in December 2022 and now hosts Argo’s miners.



To continue paying down debt, Argo sold roughly $1 million worth of <a href="https://blockworks.co/tag/ethereum">Ethereum</a> in May, and in July, the company completed a share placement in the UK that netted $7.5 million. About $1.8 million of the share proceeds went toward debt reduction. 



Shifting to its mining stats, Argo has increased its hashing power to 2.6 exahashes per second (EH/s) and the end of year goal is to nudge that up to 2.8 EH/s. To achieve this, the company aims to add 1,628 more BlockMiner rigs to its facilities in Quebec, on top of the existing 1,242 BlockMiners.&nbsp;



“We are confident that by the end of the year, all of the nearly 2900 machines will be deployed,” El-Bakly said on an earnings call. “Given the current deployment rate, I&#8217;m confident that we can likely deploy them before Q4 of 2023.”



In Texas at the flagship Helios facility, Argo is dealing with a dramatic heatwave that has persisted throughout the summer.&nbsp;



Helios is located in Dickens County, a part of north Texas. And according to a <a href="https://www.dallasnews.com/news/weather/2023/08/04/the-north-texas-heat-wave-when-will-this-end-how-many-100-degree-days-have-we-had/">report</a> from the Dallas Morning News, north Texas has seen 41 days that reached temperatures of at least 100 degrees.&nbsp;



El-Bakly explained that Helios’ fixed power purchase agreement (PPA), which was struck during the first half of 2023, has been “ultimately a good hedge, and it&#8217;s proving itself to be very valuable so far for the third quarter.”



The PPA covers a “significant portion” of the Helios facility’s power load, but not all of it.



He went on to say that this is the best possible time for bitcoin’s price to be slightly down, as strange as that sounds.&nbsp;



“The reason is…when you essentially have a fixed PPA…you can pretty much use those power blocks and sell it back to the grid,” he explained.&nbsp;



He continued, “The higher the Bitcoin prices are, the more of an opportunity cost it is for us not to mine. And at times, it&#8217;s actually more beneficial for us not to mine and sell that power back to the grid, rather than keep mining.”



To that end, Helios generated $1.1 million worth in power credits in the second quarter, which would have been equivalent to mining an additional 38 bitcoin on top of their six month total of 947.



Still, perhaps the most important question that analysts had for El-Bakly and chief financial officer Jim MacCallum was how they plan to position themselves ahead of the upcoming bitcoin halving.&nbsp;



El-Bakly said the focus is to reduce fixed costs and operating costs while also deleveraging. He seemed to also hint that future real estate sales could be on the table going forward, similar to what was done with Helios last year.&nbsp;



“In the past, we&#8217;ve mentioned excess inventory and real estate as examples of non-core assets that we can potentially monetize to generate additional cash,” El-Bakly said.



“We&#8217;re currently in advanced discussions with some of those,” he added.



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Texas heatwave raises power costs for Argo Blockchain amidst debt repayment

As the bitcoin halving nears, the hash price for bitcoin — the amount of revenue a miner should anticipate per petahash per second of hashing power — has plummeted from a yearly high in early May.&nbsp;



Miners were netting around $127 a day per petahash per second (PH/s) on May 8. As of Monday, Aug. 28, a miner can only expect $59 a day with each PH/s they have, according to data aggregated by <a href="https://data.hashrateindex.com/chart/bitcoin-hashprice-index">Hashrate Index</a>. 



However, the year 2023 is a small portion of history for one to focus on exclusively. For context, people mining during the bull run of 2021 could at times rake in upwards of $400 a day per PH/s. 



Before the halving in 2020, which cut the block reward from 12.5 BTC to today’s 6.25 BTC, there was <a href="https://www.reuters.com/article/markets-bitcoin-mining/bitcoin-miners-face-fight-for-survival-as-new-supply-halves-idINKCN0ZP060">chatter</a> from many miners about fears over profitability going forward. The <a href="https://www.coindesk.com/markets/2016/06/04/will-bitcoins-block-rewards-halving-bring-crisis-or-consistency/">same fears</a> were present during the 2016 halving.



Two days prior to the halving on May 11, 2020, the hash price was around $160 a day per PH/s. That figure was nearly slashed in half on the day of the halving to just over $87.



Data visualization of hash price since around 2018:



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="2020" height="1296" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=1024&amp;h=1024" alt="" class="wp-image-66383" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=2020 2020w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=401 401w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=407 407w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=341 341w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Screenshot-2023-08-28-at-12.25.12-PM.png?w=80 80w" sizes="(max-width: 2020px) 100vw, 2020px" /></figure>



There are several factors behind this year’s dramatic decline, though this is somewhat of a cyclical development since there have been frequent crashes in the hash price for years.



Firstly, bitcoin difficulty — an indicator showing the probability of finding a valid hash that’s below the target — has seen a significant uptick since May and an even more dramatic increase since the beginning of 2023. 



Bitcoin difficulty has jumped from around 48 trillion in May to 55.62 trillion as of Aug. 28, according to <a href="https://www.coinwarz.com/mining/bitcoin/difficulty-chart">Coinwarz data</a>.



Increased difficulty <a href="https://blockworks.co/news/crypto-miner-consolidation-imminent-as-some-industry-players-struggle">has a negative influence on the profitability of those mining bitcoin</a>, Marathon Digital CEO Fred Thiel told Blockworks in November 2022.&nbsp;



Read more: <a href="https://blockworks.co/news/lucky-solo-miner">Solo miner bags entire block reward with just 1PH of power</a>



Outside events could have an influence on the hash price for bitcoin as well.&nbsp;



When Thiel spoke to Blockworks on Nov. 1 — when the hash price was around $70 a day per PH/s — crypto was about to experience yet another downturn with the FTX collapse. One of the first red alerts came roughly eight days later when <a href="https://blockworks.co/news/1-binance-ftx-deal-is-off-unless-ftx-us-is-part-of-the-package-source">Binance backed out of the deal to acquire the crypto exchange’s non-U.S. business</a>.&nbsp;



And on Nov. 21, just days after <a href="https://blockworks.co/news/ftx-bahamas-unit-filed-bankruptcy">FTX’s Bahamas arm declared bankruptcy</a>, the hash price for bitcoin sagged to an all-time low of $55.46 a day per PH/s.&nbsp;



Another key factor in bitcoin&#8217;s hash price is, of course, the price of Bitcoin. When the price dips, even if miners extract the same quantity of coins, the value derived is less. This erosion of value can be challenging for miners, especially for newcomers and those who aren’t operating thousands of top-of-the-line mining rigs.



For instance, in early May, Bitcoin oscillated between roughly $27,500 to just over $29,000. On Aug. 18, <a href="https://blockworks.co/news/bitcoin-crypto-sell-off-market-jitters">there was a harsh selloff of bitcoin and other crypto assets</a>, dragging the price of the world’s largest digital asset down to lows in the $25,000 range.



This drastic reduction mirrored the slide in hash price days after.



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Bitcoin hash price drops to near all time low

Mining company stock prices plummeted in recent weeks as bitcoin’s price hit a snag — sending the market capitalizations of top miners into a tailspin.&nbsp;



Operators with the most stable power deals are positioned to outlast competitors heading into the bitcoin halving, an industry executive told Blockworks.&nbsp;



The combined market cap of Riot Blockchain, Marathon Digital, Canaan Inc., Hut 8 Mining and Cipher Mining Technologies fell by about 30% in the past month, according to data published Tuesday by AltIndex.com.&nbsp;



The combined figure fell to $6.7 billion last week after hitting $9.5 billion in July, according to the data aggregated from YCharts and CompaniesMarketCap.



Stock prices of miners are highly correlated to the price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), according to Didar Bekbauov, CEO of bitcoin joint mining company Xive. He noted that bitcoin’s price increase from roughly $16,000 to $30,000 earlier this year boosted mining company revenues, sending their stock prices significantly up.&nbsp;



<a href="https://blockworks.co/news/crypto-investing-h1-2023">Many mining stocks significantly outperformed</a> bitcoin, as well as fellow crypto-related stocks like MicroStrategy and Coinbase, during the first half of 2023 — with a handful up more than 200% over that span.&nbsp;&nbsp;&nbsp;



But bitcoin’s price <a href="https://blockworks.co/news/bitcoin-crypto-sell-off-market-jitters#">plummeted last week</a>, since rebounding slightly to about $26,000 by 2:30 pm ET Thursday. Bitcoin mining difficulty — a figure reflecting how challenging it is to find a valid hash below a given target — is up about 6% in the last seven days, according to CoinWarz <a href="https://www.coinwarz.com/mining/bitcoin/difficulty-chart#:~:text=The%20BTC%20mining%20difficulty%20increase,last%2090%20days%20is%2012.25%25.">data</a>.



“The recent drop in bitcoin price and increased mining difficulty made the revenues of miners smaller, which changed investors&#8217; perspectives,” Bekbauov said.&nbsp;



Bitcoin was down 10.8% from a month ago, as of Thursday afternoon.



The stock prices of Riot Blockchain and Marathon Digital — the two largest public miners by market cap — were down about 40% and 36%, respectively, in the last month.&nbsp;



Hut 8’s price was down roughly 32% in that span, while Canaan and Cipher Mining’s stocks dropped about 29% and 23%, respectively, from a month ago.



“This slump in market capitalization can make getting funding in capital markets quite harder, which can affect the development of new projects,” Bekbauov said.&nbsp;



<h2 class="wp-block-heading">Miner outlook heading into halving</h2>



In addition to the bitcoin price drop and investors rotating to other sectors, Peter Stoneberg, a managing director at crypto advisory firm Architect Partners, in a statement attributed the miner stock price dips to “halving overhang.”



Set for April 2024, <a href="https://blockworks.co/news/anniversary-of-2016-btc-halving">the next bitcoin halving</a> — which reduces per-block rewards from 6.25 BTC to 3.125 BTC — is expected to put stress on the segment.&nbsp;



“In the mining market, electricity is the main expense for generating bitcoin and whoever has the best deals will outcompete others in the long term,” Bekbauov said.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-miners-growth-2023?utm_source=CryptoNews&amp;utm_medium=app">Which bitcoin miners are growing the fastest in 2023?</a>



Riot Platforms, therefore, is among the most well-positioned, he added. The miner has a 10-year energy deal with TXU Energy that facilitates electricity purchases at roughly 2.5 cents per kilowatt hour (KWH). It expires in 2030.&nbsp;



Fred Thiel, CEO of competing firm Marathon Digital, noted <a href="https://blockworks.co/news/hut8-mining-q2-earnings-revenue">during the company’s latest earnings call</a> that access to energy at a low cost would be key when considering acquisition opportunities among financially stressed competitors.&nbsp;



“It’s got to be somebody that has an absolute amazing [power purchase agreement],” Thiel said at the time of firms Marathon could consider buying. “Or access to a very low energy cost and a facility where you can essentially pull out old machines and put in brand new, super efficient machines.”



Riot reported having $289 million in cash on hand at the end of the second quarter, while Marathon said it had about $114 million in unrestricted cash. Riot and Marathon held 7,275 BTC and 12,964 BTC, respectively, at the end of July.&nbsp;&nbsp;



Despite <a href="https://blockworks.co/news/hut8-mining-q2-earnings-revenue">Hut 8’s year-over-year revenue and bitcoin production dropping considerable</a> during the second quarter, the company seeks to find strength in diversification <a href="https://blockworks.co/news/bitcoin-miners-ai-computing">via its high-performance computing services</a>, for example.&nbsp;



Hut 8 had $26.7 million CAD (or $19.7 million US) in available cash and a bitcoin stack of 9,136 BTC, as of June 30.



Cipher Mining Chief Financial Officer Ed Farrell said during the company’s second quarter earnings call that its “unit economics” — finding low cost power, not overpaying for mining rigs during bull markets or avoiding burdensome debt — “is a critical part of our ability not only to survive but come out of winter on the other side of the halving.”



The company reported having $1.7 million in cash on its balance sheet, at the end of the second quarter, and roughly $10.5 million worth of BTC.&nbsp;



Canaan Inc. is set to report its second quarter results on Aug. 29.



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Where top crypto miners stand as stock prices tumble

Hut 8&#8217;s year-over-year revenue and bitcoin production plummeted during Q2 2023. Various challenges ahead of its merger with US Bitcoin Corp appear to have influenced the decline.



The Canadian-based company’s revenue was $19.1 million CAD ($14.2 million USD) during the second quarter, company executives said Monday — essentially flat from the first quarter and down from $43.8 million CAD ($32.5 million USD) in the second quarter of 2022.&nbsp;



The number of bitcoin Hut 8 mined last quarter was also down significantly year over year, decreasing by 58% to 399 <a href="https://blockworks.co/price/btc">BTC</a>. The company had mined 475 BTC during the first three months of 2023.



Electrical problems at its Drumheller facility contributed to the decrease, with the site currently operating at only 20% of its installed hash rate.



“The electrical issues at the Drumheller site have been compounded by high energy rates, which further increased curtailment at the site,” Hut 8 CEO Jaime Leverton said during the company’s earnings call Monday.&nbsp;



<a href="https://blockworks.co/tag/hut-8">Hut 8</a> is working on repairs, including by implementing firmware across all miner models designed to lower the power supply’s maximum output voltage, executives noted.



The company’s stock price was down about 7% on the day, as of 11 am ET.



<h2 class="wp-block-heading">Diversification key ahead of halving&nbsp;</h2>



Hut 8’s installed <a href="https://blockworks.co/tag/hashrate">hash rate</a> stayed flat quarter over quarter at 2.6 exahash per second (EH/s), as of June 30. The company expects its self-mining capacity to hit 7.5 EH/s after the close of its merger with US Bitcoin Corp — a deal <a href="https://blockworks.co/news/bitcoin-miners-cut-costs-rebound">first revealed in February</a>.



The transaction is expected to close by Sept. 30.&nbsp;



But Leverton said in a statement that Hut 8 is “not here to simply chase exahash.” She added during the Monday earnings call that the company continues to diversify its business — a strategy she said is especially important before <a href="https://blockworks.co/news/anniversary-of-2016-btc-halving">the next bitcoin halving slated for April</a>.&nbsp;



The CEO noted, for example, <a href="https://blockworks.co/news/bitcoin-miner-targets-gaming-web3-with-cloud-services-expansion">the company’s foray into the high-performance computing</a> (HPC) space by buying wireless connectivity company TerraGo in January 2022. US Bitcoin Corp. offers fiat-based revenue streams like hosting and managed infrastructure operations, Leverton added.



“We’re very much bullish on a diversified strategy, but I think across our space you’re going to just continue to see miners evolve their businesses in different ways,” she said.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-miners-ai-computing">Bitcoin miners seek revenue with AI, high-performance computing</a>&nbsp;



Hut 8’s HPC operations generated $4.2 million CAD ($3.1 million USD) of revenue during the second quarter — down from $4.5 million ($3.3 million USD) in the first quarter and from $4.7 million ($3.5 million USD) during the year-ago quarter.



The slight decline in revenue from this segment reflected the discontinuation of certain low-margin products, as well as “customer churn.”&nbsp;



Revenue from Hut 8’s five-year agreement with Interior Health — signed in June — will start being seen in the fourth quarter, executives said.&nbsp;



The company has roughly one megawatt of data center capacity and existing infrastructure available to meet customers’ artificial intelligence and other high-performance computing needs, according to Chief Financial Shenif Visram.&nbsp;&nbsp;



<h2 class="wp-block-heading">Hut 8 still looking to HODL</h2>



While Hut 8 mined 399 BTC during the quarter, it sold 396 bitcoins. Its stack, thus, increased — albeit slightly — from 9,133 BTC to 9,136 BTC.&nbsp;



Leverton noted that the company has not sold any BTC it mined before 2023.&nbsp;



“This approach was very intentional,” she said on the call. We remain very bullish on bitcoin, are committed to our treasury strategy and continue to believe that this is a powerful differentiator for us.”&nbsp;&nbsp;&nbsp;



Hut 8 <a href="https://blockworks.co/news/hut-8-secures-50m-loan">secured a $50 million credit facility</a> with lender Coinbase Credit in June — a deal designed to help it keep as much bitcoin ahead of the next halving.



“We have one of the largest self-mined bitcoin stacks of any publicly traded company, and this credit facility allows us to maintain our HODL strategy while giving us financial flexibility,” a Hut 8 spokesperson told Blockworks at the time.



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Hut 8 endures Q2 challenges, but ‘bullish on a diversified strategy’

Seven years ago, Monday, bitcoin mining rewards were cut from 25 bitcoins to 12.5 BTC — a phenomenon that spurred a price rally industry watchers expect to repeat when the next Bitcoin halving hits in 2024.&nbsp;



The implications of the history of halvings repeating in bullish price terms would spill over to bitcoin traders and holders, as well as miners and other network participants. It’s a pattern that has held true across a number of halvings: The 2016 halving was Bitcoin’s second, taking place nearly four years after the first in 2012 and four years before the third in 2020.



<a href="https://blockworks.co/news/bitcoin-halving-a-year-out">A fourth bitcoin halving is slated for April 2024</a>, at which point mining rewards will fall to 3.125 <a href="https://blockworks.co/price/btc">BTC</a> per block.&nbsp;&nbsp;



Bitcoin traded around $650 on July 9, 2016, Berenberg Capital Markets analysts noted in a recent report. And 524 days later, it hit a then-record of $19,712.



Similar rallies occurred after the first and third bitcoin halvings, Berenberg analysts — Mark Palmer, Matthew LaFlash and Hassan Saleem — found.&nbsp;



Bitcoin jumped from $12 on Nov. 28, 2012 to $1,164 just 367 days later.&nbsp;



After mining rewards were slashed from 12.5 BTC to 6.25 BTC on May 11, 2020 — when one bitcoin cost $8,821 — it reached its all-time high 549 days later at $69,036.&nbsp;



“If a rally were to occur after the fourth halving, and if it were as long-lived as the rallies that occurred after the past couple of halvings, then it would continue until around October 2025,” the Berenberg analysts wrote.



But the adoption level of bitcoin now from seven years ago is distinctly different, industry participants said.&nbsp;



Bitcoin’s hash rate sits at roughly 425 million terahash/second (TH/s), according to <a href="https://ycharts.com/indicators/bitcoin_network_hash_rate#:~:text=Bitcoin%20Network%20Hash%20Rate%20is,51.48%25%20from%20one%20year%20ago.">data</a> compiled by YCharts.com. That figure was closer to 1.5 million terahash/second (TH/s) in July 2016.&nbsp;



“Back in 2016 you could solo mine with just your laptop, whereas now you need high-end, mining-specific machines and join large mining pools to compete,” said Matt Lason, chief investment officer at crypto hedge fund Globe 3 Capital.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-miners-growth-2023">Which bitcoin miners are growing the fastest in 2023?</a>



Lason added he expects bitcoin’s price to follow previous trends by spiking in the upcoming halving’s aftermath, noting that the bitcoin halving cycle is set to correspond with a crypto and equity bull market.



“While past price increases don’t guarantee a future increase, the bitcoin halvings serve as a great reminder for everyone of the power of bitcoin’s monetary policy and the true value of scarcity in an inflationary world,” Lason told Blockworks.&nbsp;



<h2 class="wp-block-heading">Bitcoin up 82% in 2023&nbsp;</h2>



Bitcoin’s price fell below $17,000 after the collapse of crypto exchange FTX. But it stood at about $30,300 Monday afternoon — up roughly 82% so far in 2023.



The Berenberg Capital Markets analysts pointed out, too, bitcoin’s positive price action after BlackRock — a TradFi giant with $9 trillion assets under management — <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">filed an application with the SEC to launch a spot bitcoin ETF last month</a>.



<a href="https://blockworks.co/news/fink-democratize-crypto">BlackRock CEO Larry Fink said last week</a> during a Fox Business interview he believes the role of crypto is “digitizing gold in many ways.” He also referred to bitcoin as an “international asset.”



Despite an expected rise in bitcoin price, the 2024 halving presents a unique challenge for miners, Lason said. As the rewards of those companies are set to drop, their hardware and electricity costs have “exploded,” he added.



<a href="https://blockworks.co/news/miner-hodling-could-be-over">More miners have opted to sell</a> at least a portion of the bitcoin they mine in recent months to cover various operating costs.



Geoffrey Kendrick, head of Standard Chartered’s foreign exchange and digital assets research, said in a research note Monday that he expects miner selling to decrease amid higher bitcoin prices and increased cash profits.



This <a href="https://blockworks.co/news/miner-profitability-bitcoin">could push bitcoin’s price to $50,000</a> by the end of the year and to $100,000 by the end of 2024, he added.



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